Field Services

With significant expansions under long-term contracts and a resumption of drilling activity, especially in the shale areas, field services had an excellent year. Total system throughput increased 49 percent to 2.0 billion cubic feet (Bcf) per day by year-end. Our gathering volumes reached record levels, a 53 percent increase to 650 Bcf for the year.

Operating income was $151 million in 2010 plus $10 million in equity income from a natural gas gathering and processing joint venture. This compares to $94 million plus $8 million in equity income the previous year.

We continued our long-term strategy of making intelligent investments in this midstream business. Last year, we invested more than $650 million, our highest level ever, and placed substantial new facilities in service - ahead of schedule and under budget. Our contracting focus has been to obtain acreage dedications and minimum volume commitments that provide steady fee-based revenue and significant growth potential, insulating us from production volume fluctuations.

Through agreements with subsidiaries of Encana and Shell, we are expanding our systems to gather and treat up to 1.5 Bcf per day in the Haynesville Shale. These projects include our interconnected Magnolia and Olympia systems. We are now the largest non-producer gatherer in the Haynesville Shale in terms of system capacity.

We invested $310 million to build our Magnolia system's initial capacity of 700 million cubic feet (MMcf) per day. By the end of the first quarter of 2011, we will have spent approximately $52 million to provide another 200 MMcf per day, raising system capacity to 900 MMcf per day. Should Encana and Shell increase production, we could invest as much as $240 million to add capacity of up to 800 MMcf per day, bringing total capacity to 1.7 Bcf per day.

In our Olympia system, we invested $340 million in 2010 and will invest $85 million in 2011 to bring 600 MMcf of capacity per day into service. If Encana or Shell elects to provide additional volume commitments, we could invest an estimated $200 million to gather and treat up to an additional 520 MMcf per day, bringing total capacity to 1.1 Bcf per day.

With a 25 percent increase in construction hours, we realized a 50 percent reduction in our workforce safety incidents last year.

We continue to pursue growth projects that meet our investment criteria in the Haynesville, Woodford and Fayetteville shales and non-contiguous areas, such as the Eagle Ford and Marcellus shales.

Field Services Gallery

Field Services Areas

Serving more than 11,000 customers across 18 states east of the Rocky Mountains, we provide energy products and services to schools, hospitals, small retail businesses, refineries, manufacturing plants, power generators, utilities, agricultural-processing plants and more.View the Map

Field Services Highlights

380 MilesIn 2010, we constructed nearly 380 miles of gathering lines, more than 45,000 horsepower of compression and treating capacity of more than 5,100 gallons per minute in the Haynesville, Fayetteville and Woodford shale areas.

Field Services Highlights

$650+ MillionLast year, we invested more than $650 million, our highest level ever, and placed substantial new facilities in service - ahead of schedule and under budget.